Facebook parent Meta reports first decline in revenue

Meta reported its first year-on-year revenue decline in the second quarter, laying the blame at macroeconomic pressures and offering investors a gloomy outlook for the coming months.

Meta, formerly known as Facebook, is the latest big online advertising player to wilt as advertisers pulled back on spending. On Wednesday it said revenues for the April-June period were $28.82bn, down 1 per cent on the same period in 2021.

Analysts had expected $28.92bn, according to consensus data compiled by FactSet.

Meta’s net income fell to $6.69bn from $10.39bn last year. Wall Street had been looking for profit of about $7bn.

It said it expected revenue for the current quarter to land between $26bn-$28.5bn, lower than the $30.4bn analysts had been looking for, according to figures from S&P Capital IQ.

“This outlook reflects a continuation of the weak advertising demand environment we experienced throughout the second quarter, which we believe is being driven by broader macroeconomic uncertainty,” said chief financial officer, David Wehner.

Shares in the company were down about 3 per cent in after-hours trading.

Founder and chief executive Mark Zuckerberg also announced his succession plan for the departing Sheryl Sandberg, who is set to leave the company this autumn, having spent 14 years as its chief operating officer.

Wehner, a 10-year Meta veteran, will take up a newly-created role of chief strategy officer. Susan Li, who has been at the company for 14 years, will be promoted from the finance team to become chief financial officer.

Zuckerberg said the reorganisation, which spreads Sandberg’s singular responsibilities across several roles, were something he had “been working towards for a few years”.

Earlier this year, Zuckerberg had sought to reassure investors that the costs of entering new business lines would be kept under control, but warned of continuing “softness” in its revenues in the remainder of what continues to be a volatile year.

Meta’s results matched a trend of poor performance among the big players in online advertising — the business model that underpins much of the internet economy.

Snapchat-owner Snap’s shares plummeted by about 25 per cent last week after its earnings missed analysts targets, saying advertisers were slashing budgets. Advertising revenues at Twitter contracted 1 per cent in the second quarter, when Wall Street had been expecting 11 per cent growth.

The largest online ads player, Google parent Alphabet, on Tuesday blamed a pullback in ad spend after revenues from its video sharing site YouTube fell short of expectations. Overall revenue at Alphabet is growing at its slowest pace in two years. However, shares in the search group rose 8 per cent on Wednesday, with its performance generally better than analysts had feared.

An emerging advertising player, Amazon, will report its second-quarter results on Thursday. The company’s advertising business — which includes sponsored products on its store, but also on-demand video ads — is expected to command about 15 per cent of the overall online ads market by next year, according to Insider Intelligence.